Transport Logistics

4.2. The need for new financing and operating schemes

Traditionally, the public sector has played a vital role in the development of transportation

systems. Government policies have strongly influenced the national planning, design, construction

standards and requirements of infrastructure. Much of the historic and continuing provision of major

infrastructure has been met through government funding rather than through private sector investment.

The underlying assumption has been that infrastructure serves the public good and is therefore a

government responsibility.

However, pressure is mounting within many countries to significantly reduce reliance on

government borrowing by increasing private sector involvement in financing and operating of their

infrastructure. A key target area for this is the provision of logistics infrastructure, because of its direct

commercial relationship with businesses.

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There are four key reasons contributing to the need for new schemes concerning logistics

infrastructure. First, government expenditures on transport infrastructure, particularly roads, have

come under increasing scrutiny from other sectors. As a result, public funds are often insufficient to

meet growing demands for new logistics systems. Second, public sector financing may not be the

efficient option. A weak incentive structure is apt to result in mismanagement of both resources and

financial risk. Third, the public sector is rarely able to recover the full cost of providing public services

from users. Fourth, the availability of new technology such as Electronic Toll Collection allows the

private sector to provide services exclusively.